On Friday, we learned that David Wildstein, the guy at the center of
the "time for some traffic problems in Fort Lee"/bridgeport shut down
scandal, the guy who responded "got it" to that apparently instruction, and
who apparently set the whole traffic jam in motion back in September in New
Jersey when he was a high level hire at the Port Authority, on Friday, we
learned that the Port Authority had cut off David Wildstein. They notified
him on Friday that he would have to be paying for his own defense in the
Chris Christie bridgegate scandal in New Jersey.

It doesn`t matter that Mr. Wildstein was employed by the Port
Authority while he apparently put the bridge shutdown plan into motion.
The Port Authority says their bylaws prohibit them from paying David
Wildstein`s legal bills, while this matter is sorted out.

And that may mean, depending on how the legal case goes here, it may
mean that David Wildstein may find himself on the hook for a ton of money
in terms of his legal defense. But we learned that about him on Friday.

Also on Friday, the Port Authority said they were still deciding
whether they were going to do that same thing to Bill Baroni, former
Republican state Senator Bill Baroni, who is New Jersey Governor Chris
Christie`s top appointee to the Port Authority. He was David`s boss there.

Port Authority says there`s no answer yet on whether Bill Baroni is
also going to be on the hook for paying for his own legal defense.

That question of whether or not Bill Baroni is going to be cast aside
by the Port Authority the way the Port Authority has cast aside David
Wildstein turns out to be a super interesting question and a super
interesting problem overall for everybody else implicated not just in what
happened on that bridge, but implicated in covering it up afterwards.

Bill Baroni, as far as we know, did not arrange the shutting down of
those lanes on that bridge and the grid-locking of Fort Lee, New Jersey, as
far as we can tell. He`s not the one who put that plan into motion the way
David Wildstein did. He`s not the one who apparently called for it the way
that somebody in Chris Christie`s office did.

Bill Baroni, though, is the one who tried to cover it up. In an
almost impressively elaborate way, it was Bill Baroni who spun this whole
elaborate tale to the New Jersey legislature back in November, before we
had seen that "time for some traffic problems in Fort Lee" e-mail. It was
bill Baroni who showed up at the legislature with photographs and charts.
He brought big photos that he drew on, expounding in great detail, spinning
this ornate tale about the traffic study. He testified for more than two
hours about that traffic study that we now know did not exist.

At one point, Assemblyman John Wisniewski asked Bill Baroni if the
legislature could please see this traffic study that he seemed to know so
much about, Bill Baroni told him no. He said the legislature couldn`t see
it. He couldn`t provide data or numbers about the traffic study because
the study was cut short. The traffic study was ruined.

And that`s why there was no documented proof that it existed. It was
a whole elaborate story that was not true. Luckily for bill Baroni, he was
not under oath when he was making those false statements to the New Jersey
legislature. But interestingly, his whole attitude throughout his
testimony was kind of in line with the way Governor Christie`s office has
handled this controversy in terms of the tone.

Mr. Baroni throughout his testimony was pure offense. He made the
case that Fort Lee hadn`t been the victim here of some purposely caused
traffic jam. Fort Lee was not the victim here, Fort Lee actually was kind
of the perpetrator. They think they`re so special. Fort Lee was the
problem.

Camera works a little bit shaky here, but watch the point that he`s
making. It`s very clear. Watch this.

(BEGIN VIDEO CLIP)

BILL BARONI, FORMER PORT AUTHORITY OFFICIAL: So, Fort Lee global
traffic enters the special entrance to the bridge here. That arrangement
enables Fort Lee residents to skip the general traffic backup at the George
Washington Bridge. The result, 12 lanes, a quarter of those lanes are
available to Fort Lee local traffic, and that local traffic, and 75 percent
of the lanes are for everybody else. While the Port Authority is very
sensitive to the effect traffic has on our host municipalities.

(END VIDEO CLIP)

MADDOW: We at the Port Authority are super sensitive to the effect of
traffic on our cities. We have nothing to be embarrassed about with this
traffic study. Fort Lee has been getting more than their fair share of
access to that bridge for years now. So yes, we had a traffic study to
show how selfish Fort Lee is and how much they are hurting everybody else.

That was totally made up. There was no traffic study. The whole
thing was concocted as a cover-up to disguise what we now know they were
actually up to. Now, that is known and we know that Bill Baroni was in on
it. He knew exactly what happened, down to the fact that emergency
services were having trouble reaching someone who was having a heart
attack, because of that traffic on the first morning of the shutdown.
Emergency workers were having a hard time getting to that emergency.

We knew that he knew that the mayor of Fort Lee was frantically trying
to get ahold of him, to figure out what was going on in his town. Bill
Baroni knew all of that and he still tried to advance this fake story
designed to cover up what really happened.

And so, Bill Baroni got fired. I mean, he resigned.

And now the question is, does he get ruined as well? Is the Port
Authority going to pay for his legal defense in this matter? Or is he
going to get cut off the way that David Wildstein got cut off? You can
handle those bills yourself.

And that turns out to be a really important matter going forward,
because when Bill Baroni tried to sell that cover story to the legislature,
it was not just him touting that cover story publicly. That same line that
there was a traffic study and Fort Lee wasn`t the victim there, that
traffic study because Fort Lee had somehow been scamming all the rest of
New Jersey and so they had to have the lanes to the bridge shut off because
they were doing a terrible thing with those lanes, that same story line,
that fake cover story advanced by Bill Baroni as part of his cover-up dance
before the legislature, that same line was also advanced in public by New
Jersey Governor Chris Christie himself.

(BEGIN VIDEO CLIP)

GOV. CHRIS CHRISTIE (R), NEW JERSEY: The fact is, I didn`t even know
Fort Lee had got three dedicated lanes until all of this stuff happened. I
think we should review that entire policy because I don`t know why they
need three lanes. I sat in traffic before I was governor, at the George
Washington Bridge. And the fact that one town has three lanes dedicated to
it, that kind of gets me sauced.

(END VIDEO CLIP)

HAYES: So, Bill Baroni is making the Fort Lee wants special treatment
argument, justifying, therefore, the fake traffic study cover story that
disguises what they actually did to that bridge for some as yet unknown
political reason.

Governor Christie is also making the Fort Lee wants special treatment
argument about the fake traffic study cover story. And at the same time,
that line is also being advanced by a Republican state senator in New
Jersey, a Republican state senator named Kevin O`Toole. Senator O`Toole
represents District 40, which includes parts of Essex, Passaic and Bergen
Counties.

And on the same day in November that Bill Baroni was giving his big
song and dance before the New Jersey assembly, Senator O`Toole put out this
press release, saying that the committee`s hearing was a farce and that
Fort Lee is hurting the rest of New Jersey with this special lanes, thank
God they did get the lanes shut down for this traffic study. Those lanes
were so unfair.

Senator O`Toole who said he based that on press reports. He went to
say that the only reason Bill Baroni had to appear before the assembly in
the first place is because out of touch Democrats were trying to score
political points against a, quote, "ever popular governor." He said there
was a veil of secrecy around Fort Lee`s sweetheart deal that finally came
to an end with this long overdue traffic study. The traffic study that was
a made up cover story that disguised what was going on in the bridge.

Interestingly, though, Senator O`Toole turns up in the documents that
were obtained under subpoena in the first iteration of the investigation by
the legislature.

David Wildstein, you may remember, he resigned from the Port Authority
on December 6th. Leading up to that resignation, he hints in the e-mails
that he`s been able to see that he knows what`s coming. That he knows he`s
going to have to go over this bridge scandal. He writes to Chris
Christie`s campaign manager that he had taken empty boxes to work,
presumably to clear out his desk, when he got fired at the end of the day.

Well, on December 3rd, three days before he resigns, David Wildstein
e-mails Governor Christie`s spokesman, Michael Drewniak, to tell him that
they need to talk soon and they need to talk in person. They set up a
dinner for the following night. The day after that dinner, which is also
the day before David Wildstein resigns, he writes to Governor Christie`s
spokesman, Michael Drewniak, thanking him for his advice, thanking him for
his friendship, and then he says this, "Spoke with O`Toole this morning and
he will talk with you later today."

Next day, David Wildstein resigns. Christie spokesman Michael
Drewniak puts out a glowing statement about what a tireless advocate David
Wildstein has been for the people of New Jersey. And in the midst of that
exchange, between some of the key players in this unfolding scandal,
there`s that line written by David Wildstein, spoke with O`Toole this
morning and he will talk with you later today.

The only O`Toole anybody thinks that refers to is Senator Kevin
O`Toole, who put out the press release advancing the cover story about the
traffic study and saying Fort Lee didn`t deserve to have those traffic
lanes.

So, why did that happen? Why did Senator O`Toole have to call the
governor`s spokesman the day before David Wildstein resigned?

Well, today, the New Jersey Senate and the New Jersey Assembly
officially combined their interests into the scandal. And as part of that
process, Republicans got to a point for Republican legislatures to the
special joint committee that`s investigating the whole scandal. They chose
three Republicans from the New Jersey assembly. These are the three
Republican members of the assembly that they chose. And from the state
senate they chose one person.

Who did they choose? Kevin O`Toole, described in the press as a close
ally of Chris Christie`s. Chris Christie personally lobbied for him when
Republicans were picking their minority leader, Governor Christie
personally lobbied the Republicans in the legislature to pick Kevin
O`Toole.

Also for the record, the senator who knowingly or not helped advance
the fake cover story that was cooked up by one of the guys who has been
fired as a result of this scandal, and who himself appears to turn up in
these documents, "Spoke with O`Toole this morning. He`ll talk with you
later today."

Asked directly about why David Wildstein apparently contacted him
right at the time he was resigning, so far Senator O`Toole says he doesn`t
know. He told "The Star Ledger" newspaper when they asked him about it
directly and, quote, "I don`t know what that means."

As the legislature decides to reconstitute this investigatory
authority today, there`s some question on whether the Republicans would
vote again to have the investigation go forward. The last time they voted
for the investigation to go forward, it was a unanimous vote. There was
some question today as to whether or not Republicans would stick it with or
whether they would balk.

Well, it was unanimous again today in both the House and the Senate.
It was unanimous. Every Republican in the New Jersey legislature voted
that this investigation should go ahead, which I should mention, rather
undercuts claims by Christie allies like Rudy Giuliani that this
investigation should be stopped because it`s obviously a partisan witch
hunt. You know, if every Republican in the legislature votes for it, it
can`t really be a Democratic witch hunt.

That said, the one Republican senator who New Jersey Republicans
picked to be involved in this investigation is somebody who seems to have
been more than an observer of what has happened thus far. After this
dramatic unanimous vote today all the Democrats and all the Republicans in
the assembly and to the Senate unanimously voting for this investigation to
continue after today`s dramatic vote, there are three interesting questions
that remain.

Number one, was the one Republican senator on the committee
investigating this thing actually involved in what happened in some way?
And if so, how will the investigative committee handle that if it arises
during their own investigation? Awkward.

Number two, Hoboken. Does the committee have to stay tightly focused
on the bridge scandal? Or is it possible that the other issues like
Hoboken Mayor Dawn Zimmer`s claim about Sandy funding being tied to a
private redevelopment in her town, can that be on the table as well as the
investigation goes forward?

We know that the U.S. attorney and the FBI are investigating Hoboken.
Could those investigations affect how the legislature can investigate that
matter?

Number three, and perhaps most importantly, will Governor Christi
Christie`s top staff and his appointees and his re-election campaign and
his own office, the office of the governor of the state of New Jersey, will
all of those individuals and entities comply with the subpoenas that are
now technically being reissued through this new committee of the
legislature? Those reams of documents and BlackBerrys and iPhones and
iPads and call records and instant message records and diaries and
calendars that the subpoenas say all have to be handed over a week from
today, on Monday, the day after the Super Bowl. Will those be handed over?
Are they going to do it?

Stay with us.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

CHRIS HAYES, MSNBC HOST: I have to read this to you and get your
response to it because it was one of the most vicious little jabs in there.

After forwarding an article about the traffic jam, we have David
Wildstein who since resigned saying, "It will be a tough November for this
little Serbian." Got a response to that?

MADDOW: He said it. That was Fort Lee Mayor Mark Sokolich who for
the record is Croatian. Not Serbian. We learned today that Mayor Sokolich
of Fort Lee, New Jersey is going to the State of the Union Address tomorrow
in Washington, D.C. He will be there as the guest of New Jersey
Congressman Bill Pascrell.

Joining us now is Kevin McArdle. He`s statehouse bureau chief for New
Jersey 101.5 radio.

Mr. McArdle, thanks very much for being with us. Appreciate your
time.

KEVIN MCARDLE, NEW JERSEY 101.5 RADIO: My pleasure, Rachel. Any
time.

MADDOW: First, let me just ask you about this development actually
with the State of the Union and the Fort Lee Mayor Mark Sokolich being
invited to the State of the Union by a New Jersey Democratic congressman
who has been a real critic of Chris Christie`s. Should we just see that as
a pure political message here?

MCARDLE: That`s how I see it. Congressman Pascrell has been very
outspoken against Governor Christie, from the get-go, in fact, not just
from the bridgegate scandal and so fort. I`m not surprised he would make
some political hay in this way at all.

MADDOW: In terms of the investigation that`s happening of this
scandal at the legislature, I was perhaps naively surprised today when I
saw that the Republicans` pick for state senator to be on that committee is
Kevin O`Toole. As far as I understand it, he`s thought of as being as
close an ally as the governor has in the legislature, and his name does
turn up in the subpoenaed e-mails and text messages that have been released
so far already by the investigation.

What`s your take on this appointment?

MCARDLE: Well, first off, you are absolutely correct that Senator
O`Toole is a member of Christie`s circle. For his part, Senator O`Toole
said he doesn`t recall that conversation with David Wildstein, and if he
had one, it`s not out of the norm for what he would do or members of his
office would do with officials with the Port Authority.

What Kevin O`Toole said later that he did remember was he definitely
did not talk about the assemblies investigation into the bridge-gate probe.
So, that clearly must have been good enough for the Senate Republican
leader Tom Kean Jr., otherwise he won`t have placed him on the committee.

MADDOW: One of the other issues about Senator O`Toole just in doing a
Google search about his involvement in the issue, is that he`s one of the
people who advanced the sort of traffic study cover story. That is when
Bill Baroni spun the tale to the state legislature about the traffic study,
he tried to make it seem justified by saying that Fort Lee was really
getting one over on the state and had an unfair advantage by having those
lanes.

Senator O`Toole also advanced that line of reasoning in a press
release that was sent out the same day of that testimony. Is that
something that all New Jersey Republicans were doing at that time and we
shouldn`t see it as unusual or did Kevin O`Toole go out on the limb there?

MCARDLE: I don`t think he went out on a limb. Remember, the timing
at that point, it was before we had the subpoena documents and knew what we
now know today. It`s perhaps -- I can`t put thoughts on Senator O`Toole`s
head or read his mind. But I can only take him at his word, he might have
believed, in fact, that there was a traffic study.

MADDOW: In terms of what happens next, those reams of documents --
people`s BlackBerrys, their calendars, their call logs are all due a week
from today, in terms of people responding to that legislative subpoena.
Anybody who got federal grand subpoenas we think is probably going to have
to respond to them by two days later.

Do you know anything that we should -- that could help us anticipate
whether or not the subpoenas are going to be complied with or whether
anybody expects to fight them.

MCARDLE: Well, I do. As of today, as of this moment, you and I
speaking, no one has requested an extension. So, we expect them to be the
legislature`s subpoenas, those 20, we expected those on February 3rd and
two days later are the subpoenas that the U.S. attorney, Paul Fishman has
requested.

So, it`s really a little bit of all quiet on the western front until
we find out if somebody asks for an extension or if everybody complies.
Remember, these are real deal subpoenas. They have to comply. They don`t
have a choice.

MADDOW: Kevin McArdle, statehouse bureau chief for New Jersey 101.5
Radio, it`s great to have you here. I particularly like talking to a radio
reporter about this. I respect your work immensely. Thanks a lot.

MADDOW: There was a major shift in power in the state of Virginia
today. Democrats take the Senate. The recount in the sixth district state
senate race confirmed today that Virginia Democrat Lynnwood Lewis defeated
Republican Wayne Coleman by a grand total of 11 votes. And technically
that recount balances the state senate exactly, 20 Democrats and 20
Republicans.

In Virginia, the tie breaking vote in the senate goat to the
lieutenant governor who is now the newly elected Democratic Lieutenant
Governor Ralph Northam. That means that de facto control of the Virginia
state senate has returned to the Democratic Party today by a grand total of
11 votes, which you should think about that next time you`re weighing on
Election Day whether or not it`s worth it to go vote.

(COMMERCIAL BREAK)

MADDOW: A few months after President Obama was first sworn in as
president, in May of 2009, he did something that almost never happens in
American history. For the first time since it happened to General Douglas
McArthur in 1951, the U.S. civilian leadership in May 2009 decided to
relieve a top wartime commander of his post. A review was done of the war
in Afghanistan and the overall strategy there and General David McKiernan
who was the top U.S. commander in Afghanistan was brought home.

And then it happened again. The top U.S. commander who replaced
General McKiernan was General Stanley McChrystal. And ultimately, he, too,
was recalled back to Washington. The general`s dismissal came less than
two days after "Rolling Stone" magazine published Michael Hastings article
about General McChrystal and his top staffers speaking disparagingly about
civilian leadership.

General McChrystal was called home. He was replaced in Afghanistan by
General David Petraeus. And General Petraeus did serve out his time in
Afghanistan without being relieved of command or just plain fired, but it
was only about a year into his tenure on his next job, which was head of
the CIA, before he too resigned after he was caught out having an
extramarital affair.

It has not been a good run, really, for some of the top brass served
as the top of America`s longest war. The worst allegations of all, though,
were against a less famous general. General Jeffrey Sinclair, who was
deputy commander of the 82nd Airborne as of last year when he was abruptly
called home from Afghanistan. He ultimately is facing a list of serious
criminal charges, an eight-count criminal indictment including charges of
forcible sodomy.

If convicted, he faces a maximum sentence of life in prison. General
Sinclair`s court-martial is expected to begin in about six weeks before a
jury of his peers, which in this case means a jury full of generals.

But "The Washington Post" reports yet more today, that we didn`t
previously know before this reporting. Apparently while they were
investigating the Jeffrey Sinclair allegations, the Army turned up
something else. Quote, "Last summer, Army prosecutors were combing through
the e-mail counts of Brigadier General Jeffrey Sinclair, a commander facing
court-martial on sexual assault, adultery and other charges, when they
uncovered a raunchy exchange with two other generals. The exchange started
in March 2011 when a deputy commander for operations at the 82nd Airborne
held a meeting with a newly elected female member of the House. The then-
colonel gave a pointed summary of the meeting by email to his superior
officer, who was a major general, and also to General Sinclair.

Quote, "First, she is smoking hot", the colonel wrote to two generals
who was his superior officers. "Second," he said, "briefing went well."

After a reply from Jeffrey Sinclair about confirming the
congresswoman`s hotness, the colonel replied more than an hour later with
an apology for his delay in responding. At this point I`m going to let you
read what he wrote in the words of the "Washington Post."

I`m not going to read that on TV.

So, "The Post" learned of this e-mail through a Freedom of Information
Act request. But interestingly, the Army redacted it so heavily when they
responded that it wasn`t clear at all what had happened. The whole reason
they were able to get what you just read on screen is because they got the
unredacted, rather more disgusting version of the e-mail from some other
source, not officially from the Army. That`s what they published in the
paper today.

There ended up being an army inspector general investigation of what
happened there with the congressman and the colonel and two generals he was
reporting two. Ultimately, the colonel became a brigadier general,
although he was found to have failed to demonstrate exemplary conduct by
the inspector general. He still got his job. He still`s a brigadier
general and he now works at the Pentagon for the Joint Chiefs of Staff.

Another one star general in the Air Force was found by the inspector
general of that service to have, quote, "brought discredit upon himself by
repeatedly drinking vodka while on the job as an Air Force general." He
today is still on the job, on active duty Joint Base Langley-Eustis in
Virginia.

Another one-star general in the Army was suspended in May for having
a, quote, "physical altercation" with his mistress. In July, he was
relieved of his position as the top commander at Port Jackson in South
Carolina. In August, he was found guilty of assaulting one of his
mistresses and for committing adultery. Today, he`s still a one-star
general and he works at the Pentagon on active duty. He`s a special
assistant to the Army`s vice chief of staff.

We have covered a lot of worrying reports on this show recently about
misbehavior by generals, most of them recently having to do with the
nation`s troubled nuclear weapons forces. But this "Washington Post" front
page scoop today on the array of flag level officers and top level brass,
famous and otherwise, with behavior problems and disciplinary problems and
criminal problems is stunning reporting and very dismaying.

In the most recent, bipartisan budget that was approved by Congress,
the Patty Murray-Paul Ryan spending bill, it was a political surprise when
veterans got the short end of the stick, cuts to retirement pay and even to
survivor benefits. Parts of those cuts have been reversed, part of them
have not.

We tend of the think of veterans as a political group with enough
capital to never get the short end of the stick when it comes to American
policymaking. But recent evidence is making it look like right now at
least that is not the case. Veterans are not getting what they`re asking
for and in some cases they`re not getting what they have been promised.

Ahead of tomorrow`s State of the Union, with country`s Iraq and
Afghanistan veterans pressuring in particular, pressuring hard for today`s
young veterans and current service members to get some specific commitments
from the president and Congress at the time that the president and Congress
appear willing to break those commitments -- is the top level officer corps
in the United States military part of the problem? Is the trouble at the
top of the Pentagon? This disaster after disaster after disaster on these
flag ranked officers, is that making it harder for the rank-and-file to get
their due, to get what their owed?

MADDOW: Pete Sousa, the official White House photographer today
posted on Instagram this photo of the president in the Oval Office going
over edits of the State of the Union Address, because it`s on Instagram,
though, this photo thing is not a one-way communication. If you scroll
down to the comments section for this photo, right up top, you`ll see,
look, Paul Rieckhoff writing, quote, "Veterans nationwide hope to hear the
president oppose the ridiculous cuts to our retirement benefits. Mr.
President, please keep your promise."

The president is expected to address military benefits in the State of
the Union tomorrow, plus a lot more.

Joining us now is Paul Rieckhoff, Army veteran, founder and executive
director of Iraq and Afghanistan Veterans of America. He`s going to be
attending the State of the Union tomorrow as a guest of Senator Kirsten
Gillibrand of New York.

Paul, thanks for being here.

PAUL RIECKHOFF, IAVA: My pleasure, Rachel.

MADDOW: What do you consider the most important thing that you want
to hear about service members, veterans and their families in the State of
the Union?

RIECKHOFFF: We want to hear the president stand with all the veterans
group in America and basically every veteran and military family I`ve
spoken to in the last few weeks and oppose these ridiculous retirement
cuts. This has a real impact on our families. If you`re a retired E7 or
sergeant first class coming out of the Army, this is going to mean $85,000
you`re going to lose.

More importantly, this was a promise that was made with our troops and
veterans. When you sign up, your retirement benefit is part of the deal.
And Patty Murray and Paul Ryan got together and both agreed to this deal,
and it`s been outrageous for everybody across all parties and lines.

And they`ve got to walk it back. The president has got to step out
and say he`s against these cuts and he`s against any future cuts like it.
Because what`s next? Is the G.I. bill next? Are mental health benefits
next?

This is a very important line. And veterans are pushing back hard.
That`s why we`re going to be protesting on Capitol Hill tomorrow and it`s
an issue I hope to raise at the State of the Union tomorrow as well.

MADDOW: Paul, we keep hearing from members of Congress, particularly
on the side that the cuts will be fixed. That it was basically a screw up.
They never meant to do it. It`s all being reversed.

What`s your reaction to that?

RIECKHOFF: Yes, trust Washington is what they`re saying. I mean,
what`s clear is some people didn`t read the bill. The original budget
didn`t even protect survivors, widows and disabled veterans.

So, this is Washington incompetence or neglect at its worst. The
bottom line is they didn`t protect the veterans. And now, they`re trying
to walk it back and we need it to happen immediately. We can`t hear that
it`s going to happen months from now or it`s going to happen next year or
don`t worry about it.

Right now, there are troops in Afghanistan who are watching your
program who will have the retirement benefit cuts. That`s outrageous.

All Americans should be standing up right now. Go to our Web site.
Sign a petition. Call your congressman.

But this is an important point in American history for us to stand
with our veterans and troops and say we`re going to protect them and ensure
the families are properly compensated, and that we`re going to honor the
promise we made. America`s got to keep its promise for their service
members and starts now.

MADDOW: Paul, I have a question for you that is both strategic but
also I recognize kind of sensitive. It is about the "Washington Post"
scoop on the front page about misbehavior and disciplinary problems and
criminal investigations of generals and admirals.

And that always happens to a certain degree. I mean, there`s no -- no
institution is immune from scandal even at the top. But at the top level,
a lot more than we have seen in a long time, do problems like that at the
top brass hurt the ability to effectively advocate for service members
issues? Is that either a distraction or a countervailing force for
advocating for servicemembers?

RIECKHOFF: It doesn`t help our image. I mean, the military is always
held in high regard by people across political aisles and by the American
public. So, it doesn`t help there.

You know, I hope it gives us an opportunity to show how the justice
system can be swift and can hold these people accountable and how we can
make change, especially around the issue of military sexual assault and
military sexual trauma. Those cases of sexual harassment have been
incredibly important for us to elevate, and that`s part of what Senator
Gillibrand has been taking on and we hope to take on. I hope the president
takes it on in the State of the Union.

But at the end of the day, our veterans have served well across the
ranks. And these folks are outliers, and we hope that people will see that
and still stand with us and tell Congress this week especially to keep your
promise and don`t cut our retirement benefits.

Paul Rieckhoff, executive director of Iraq and Afghanistan Veterans of
America, which is online at IAVA.org -- Paul, thank you for your time
tonight and have a good time at the speech tomorrow, man.

RIECKHOFF: Thank you, Rachel. You too.

MADDOW: All right. We`ll be right back. Stay with us.

(COMMERCIAL BREAK)

MADDOW: So, the weather this weekend obviously was perfect if you
live anywhere near Palm Springs, California. Maybe you played some golf on
the manicured desert greens, enjoyed a cool drink by the pool. January in
Palm Springs, look, means 75 degrees and sunny. You feel like a million
bucks -- or maybe you feel like several billion bucks.

Around this time every year, the conservative activist billionaire
brothers Charles and David coke get together with other very wealthy people
somewhere around Palm Springs, in order to talk conservative politics and
conservative causes. Charles and David Koch try to hold these regular
seminars in as much secrecy as possible because otherwise, the scene
outside where they`re meeting ends looking like this.

This was outside the Koch`s desert summit in 2011, and that was an off
year for politics. But that year people did find out in advance where they
were going to and when they were going to be there, and so, there was sort
of a welcome party in reverse for the Kochs and their rich allies that
year. That was 2011 when the Kochs and their friends were presumably
planning their strategy for the next election cycle. The next election
cycle, of course, was 2012.

A few weeks ago, "The Washington Post" tallied up all the money the
Kochs and their network raised for the 2012 election cycle. And by "The
Post`s" accounting, it looks like something on the order of about $400
million just for the 2012 election poured down into a rabbit warren of
essentially un-Google-able, hard to trace, opaque, non-profits and
organizations, most with seemingly related names and spread out all over
the country and good luck sorting it out.

"The Post" says they found, quote, "A labyrinth of tax-exempt groups
and limited liability companies helping mask the sources of the money, much
of which went to voter mobilization and to television ads attacking
President Obama and congressional Democrats."

What the Koch brothers helped fund in time for the 2012 election was a
huge deal. I mean, at $400 million, it was among the most mega of all the
mega-money in that election. What they helped build for 2012 was very
impressive on paper. But in real life, it flopped. The Kochs and their
wealthy allies wanted Mitt Romney to become president, of course. In that
effort they failed.

They also tried to put Republicans back in control of the Senate. And
they failed.

They tried to get more Republicans in the House as well, and they
failed at that, too.

2012 was such a disappointment to the Kochs that they delayed their
plans for the 2013 summit. Again, they usually troop off to Palm Springs
in January. But after the 2012 election, they pushed it back from January
until April so they could have more time to try to figure out what to do.

But still, they were yet done with the pain from that 2012 election
cycle. In October, California officials announced that two groups they
described as part of the Koch brothers network had broken campaign finance
rules in the way they shuffled money around -- a huge last minute infusion
of cash into two California ballot initiatives. One to gut union rights
and one to shield the richest taxpayers for a tax hike. That cash infusion
was found by the state of California to be illegal.

One of the groups dumping money into those fights in California
reportedly got a heap of cash from donors at the Koch`s Palm Spring summit
in 2012. And in October, those groups agreed to a record find, handed down
by the state of California.

For their part, the Kochs insisted they had nothing to do with that
scandal in California. They said they did not control those particular
outfits and did not give money directly or indirectly to any nonprofit in
that particular California election. But, of course, they did still end up
with their name in this headline, and in this one.

This is "The Washington Post" attempting to chart the Koch map $400
million election machine for 2012. You can see one of the groups that got
the wires crossed in California is right there in the middle of the web, in
the middle of the Koch-backed network.

For the Koch brothers, the news out of California presents a different
and worrying kind of challenge. I mean, they can write impressive checks.
They can get other rich people to write impressive checks. But what makes
the Kochs genius is that they help grow networks, networks that then grow
other networks. And in so doing, they create a web of immense influence
that seems decentralized.

So, when someone at the end of the chart does something that gets
noticed, either for good or for bad, well, then, it`s your call as to
whether or not you say you`re proud to take credit for what they did or
whether you tell everyone that you have no connection to them whatsoever.

Change the world. Sway elections, but keep your hands clean. You
don`t have to answer questions about it. You don`t have to face scrutiny
have to face scrutiny as to your motives or anything else and it cuts down
on those annoying protesters outside your swanky resort meetings.

If you are writing checks alongside the Kochs, you get to be far of
this leviathan far reaching, well-funded nest of networks and no one ever
has to know that about you unless you want them to. "The Post" called it,
quote, "a maze of groups that cloaks its donors."

But again, in 2012, the maze of linked groups and money did not win
them the 2012 election, and they had that problem in California with the
network going sideways and getting busted by that state there.

So, what happens this year? What if the Kochs try to sell in their
desert retreat this year, which happened just this past weekend in Palm
Springs? It was kind of fun watching the local press trying to figure out
where the meeting was going to be held this year. Hint, look for the hotel
where all the rooms are booked and suddenly the restaurant is inexplicably
off limits.

Politico.com broke the news on Friday about the Kochs` pitch this
year. Quote, "This year the Kochs` close allies are rolling out a new,
more integrated approach to politics. That includes wading into Republican
primaries for the first time to ensure their ideal candidates end up on the
ticket and also centralizing control of their network to limit headache-
inducing freelancing by affiliated operatives."

So, the Kochs are reportedly selling more influence over which
candidates are running and more control over the network. All the non-
profits with the hard to follow anonymous-sounding names that have been
freelancing out there, right, more control.

And good on "Politico" for being able to report that out in advance of
the meetings this weekend, because we know how secret they like to keep
this stuff. I`ve got to say, though, when that story broke, I always
wonder now, every time I see somebody report something new on the Koch
brothers and particularly on what the Koch brothers fund, I wonder if they
are getting buried under a ton of lawyer papers every time they report this
stuff too, or whether the Kochs just do that to us.

(BEGIN VIDEO CLIP)

MADDOW: We will not stop reporting on the political actions and the
consequences of the political actions of rich and powerful men, even if
they send angry letters every time we do it. I will not read scripts
provided to me by anyone else. I do not play requests.

I will happily make correction when I do get things wrong. We do it
on the show all the time. But I will not renounce or retract reporting
that is true, even if the subjects of that reporting don`t like it.

Being a political actor means being subject to political scrutiny. If
you don`t want to be known for it, don`t do it.

MADDOW: So, a few weeks ago we reported on this show about forced
drug testing for people on welfare in the state of Florida. It`s a Rick
Scott policy in that state. It has not been going well in that state.

And that`s of wider political interest for two reasons. One is that
Florida Governor Rick Scott`s running for re-election and he`s making that
policy part of his re-election effort, even as a federal judge has just
struck down that policy as unconstitutional.

Also, though, the second reason -- that story may not just be about
Florida anymore. Between the time that the forced drug testing thing got
signed into law in Florida and the time that the federal judge first struck
it down, a Florida group called the Foundation for Government
Accountability started marketing that forced drug testing law around the
country, trying to talk other states into doing it as well. They went to
public hearings in Georgia to share the good news about Florida`s terrible
policy. They went to a national meeting of the group ALEC in Arizona to
market Florida`s terrible policy to state legislators from all over the
country.

So, we reported that a few weeks ago. The problems with that forced
drug testing policy had as a policy in Florida, its problems legally in
Florida, and the efforts of this Koch brothers-affiliated group, the
Foundation for Government Accountability, to nevertheless try to sell this
very bad policy nationwide.

The Koch brothers responded by telling us that they had nothing to do
with the Florida Foundation for Government Accountability, they rejected
any effort to link them with what that group does and with the policies
that that group promotes.

The Koch brothers say they have nothing to do with the issue of drug
testing for welfare benefits, nothing to do with that Florida law, and
nothing to do with this Florida group, the Foundation for Government
Accountability. Quote, "An attorney for Koch Industries says Koch
foundations have no connection to the Foundation for Government
Accountability." A spokesman for the Koch Company says, quote, "Koch has
not contributed to the Foundation for Government Accountability. We have
had no involvement whatsoever with the Foundation for Government
Accountability or the Florida law."

No involvement with the Foundation for Government Accountability
whatsoever. They do not want to be associated with the work of this group.
Or the policies this group supports.

They do not want to be tied to them. They do not want you to hear
forced drug testing in Florida and think about the conservative networks
that have been spawned by the Koch brothers.

Here`s the thing. This is the website for the Institute for Humane
Studies. The Institute for Humane Studies is a non-profit. They list
Charles G. Koch of Koch Industries as their chairman.

And one thing this Koch-chaired non-profit has done is offer the
Charles G. Koch Summer Fellows program. The Koch summer fellowship is a
paid public policy internship, quote, "At the state level, the fellowship
strengthens the institutional capacity of market-oriented think tanks."

You and I might not get invited to the Kochs` fund-raising party in
the desert. We don`t get to watch them building their network. But every
so often, we get a glimpse of the Kochs` network itself building.

HEATHER LAKEMACHER, INSTITUTE FOR HUMANE STUDIES: Next -- and this is
my personal favorite because it`s the one I direct, is the Koch Summer
Fellow Program. And the Koch Summer Fellow Program is run by the Institute
for Humane Studies, and here are the basics. And obviously, I can go into
a lot more detail in the Q&A session.

It`s a paid internship program which pairs you with opportunities
throughout the entire country. So we work with state policy network, and
one of the advantages that we have there is many of the state groups aren`t
able to pay internships. They only have unpaid internships. And so
through the Koch Summer Fellow Program, we actually provide a stipend for
the summer.

So, it`s an opportunity to work with a group and get paid for it.

(END AUDIO CLIP)

MADDOW: That was a nice-sounding lady from the Koch-chaired Institute
for Humane Studies talking to students from a Koch-funded organization last
year. She`s talking about sending Koch fellows to the State Policy
Network, which is a group of think tanks which includes the Foundation for
Government Accountability. That group in Florida that the Kochs say they
have nothing to do with.

State Policy Network says it is very excited about these liberty-
loving interns who get a stipend, housing assistance, and travel
scholarships as part of their Koch fellowship.

In full disclosure, I should tell you that a lot of corporations also
give money to the State Policy Network, including our corporate owners at
Comcast. But not all of them send interns to these groups as Charles Koch
fellows.

(BEGIN AUDIO CLIP)

LAKEMACHER: You can use, like, the Koch Summer Fellow Program if you
go to our Web site, we`ve got what we call the host search. And it`s a
listing of all of the organizations that we work with.

MADDOW: That`s how the Koch fellows people tell you to find out where
you can work if you get one of these paid Koch fellowships. You go to the
Koch fellows host search page. You can search it by policy interest or by
region.

And oh, hey, look, that group, that the Koch brothers say they and
their foundations have absolutely no involvement with whatsoever, the
Foundation for Government Accountability, that group in Florida that has
been pushing that drug test the poor law. Look, there they are. Same
guys. Same guys the Kochs say neither they nor their foundations have
anything to do with.

Anyone who reports out new information on the political activities of
the Koch brothers, particularly on what they fund and who they`re linked
to, tends to get acquainted with their teams of lawyers and spokesmen very
quickly. They challenged our original report this month about the
Foundation for Government Accountability and them being a Koch-affiliated
group.

We stand by our report. Then we asked them about this other very
bright link between the Koch brothers and the Florida group they want to
say they`re not affiliated with whatsoever. We asked them about this other
link.

And they said essentially, hey, quit changing the subject. Spokesman
telling us, quote, "Rather than admit you are wrong about that Florida
group, you are shifting the focus to a new line of flawed reasoning that
isn`t relevant to your previous coverage."

But the Koch network is the whole point of the previous coverage and
all the coverage we`ve ever done of these guys. Again, the Kochs say they
have nothing to do with drug testing for welfare benefits or with the
Florida law, but the group that is promoting that Florida policy around the
country is affiliated with the Koch brothers and benefits from being part
of their network of conservative political groups. And that matters, and
reporting it despite their threats matters.

The new "Politico" reporting on the Kochs` otherwise secret plans is
that the Kochs, whose operation already rivals the Republican Party, they
are now reshaping their operation in ways that could end up reshaping the
party itself, starting with raising as many millions of dollars as possible
this weekend in Palm Springs.

The Koch brothers are spending and organizing the spending of more
money than almost anyone in history to influence American politics. They
also fight vociferously to limit real reporting on how much they spend, how
they spend it, and what the impact that spending has on our polity. They
want to influence American politics. And they are influencing American
politics. But they do not want on known for what it is that they do.

And at one level, this is one small fight about one group pushing one
laughably terrible policy from Florida. But this is also about how
American politics works now, and whether it stays in the light or whether
it is allowed to go underground, because how they are working their side of
politics now is millions and millions and millions of dollars, hundreds of
millions of dollars that are intentionally made difficult to trace,
funneled to networks that build networks that you can disown when you want
to if you want to.

Does that intentionally opaque political activity get reported on now,
or doesn`t it? They have tried to make it as hard as possible for that
reporting to get done. I say we do it anyway. It`s our country too, even
if we don`t get invited to your billionaires` party in Palm Springs every
January.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY
BE UPDATED.
END

Copyright 2014 CQ-Roll Call, Inc. All materials herein are protected by
United States copyright law and may not be reproduced, distributed,
transmitted, displayed, published or broadcast without the prior written
permission of CQ-Roll Call. You may not alter or remove any trademark,
copyright or other notice from copies of the content.>